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Car Insurance: Do you need Uninsured Motorist?

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Do you need uninsured motorist on your car insurance?

Car Insurance

Do you need Uninsured Motorist?

At our agency, we have a host of coverages we recommend for your car insurance, and each coverage has a specific reason behind it’s recommended. 

We don’t just sling out recommendations just to increase your payment, we just want to make sure you’re covered properly for common claims that can occur. 

Today we’re talking about uninsured motorist coverage, which is probably one of the most important items you can have on your policy. 

So many drivers don’t understand that all uninsured motorist is NOT the same, and many agents fail to explain that to their clients – simply because they’re afraid of an objection or they don’t understand the differences themselves. 

So let’s get into it!

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Why do you need it?

So before we get too deep into it, we need to make one things clear: the difference between uninsured drivers, and underinsured drivers. 

Uninsured drivers would be people who have no car insurance, period. 

Underinsured drivers are people who have car insurance, but not enough to cover the damage they caused.

And this makes sense, because technically anyone can be an underinsured driver – it just depends on how bad the accident they caused, turns out to be.

In the state of Georgia, you’re not required to have uninsured/underinsured motorist coverage, but about 20 states have made uninsured motorist a state requirement, for good reason. 

Its quite odd for our home state not to require it, considering the the Insurance Information Institute did a study back in 2021, finding about 12% of drivers are uninsured in Georgia. 

So in simple terms, that means 1 out of 10 drivers you see on the road, have no insurance. If you commute to work, you’re probably running into 5-10 uninsured drivers, every day. 

So why wouldn’t the state of Georgia require uninsured motorist coverage, since the risk is so high? Well, that’s a great question you can direct at your state legislators or the commissioner of insurance. 

Now the better question is, why didn’t your insurance agent break down uninsured motorist coverage, and the different variations you can purchase? 

Did they even tell you there are multiple types, that work completely different?

A licensed insurance agent has two jobs, to advise and support. Your agent should not be assuming what coverage you want, they should simply explain each coverage – so you can make an educated decision. After all, it’s your coverage – not theirs. 

Breaking it Down

Reduced by & Added on

The most common form of coverage is called “reduced by” or “traditional” uninsured motorist. 

Now, before we get into it – you should know that all forms of car insurance coverage can vary by state, and insurance providers. So you should always consult a licensed agent before making coverage decisions. 

Now, “reduced by” uninsured motorist would essentially mean: if you’re hit by an uninsured driver, you can file a claim with your insurance provider – and they can provide coverage up to you current uninsured motorist limits. If you’re hit by an underinsured driver, then you may be able to receive the difference in your limits, and the other parties. 

If you’re limits are $25,000/$50,000/$25,0000 – then you’d have a max compensation of $25,000 per person, $50,000 per accident, and $25,000 for property damage – which is pretty helpful if someone totals your car, and they drop the “no car insurance” bomb, on you. Something is better than nothing, right?

Now what if they HAVE car insurance, but their liability limits are less than the damage they caused to you? 

For example, let’s say you drive a $40,000 car, and they cause around $65,000 in injuries to you, and your passengers. Then they get out, show you their ID cards, and their limits are $25,000 for bodily injuries, and $25,000 for property damage. 

In this case, you’ve been hit by an underinsured driver, and there’s a potential for YOUR uninsured motorist to kick it, but it depends on your limits. 

Well, to make it simple, if you have reduced by uninsured motorist coverage, with a limit of $25,000, and the other party has a liability limit of $25,000, your insurance carrier would provide no additional coverage for the underinsured claim.

Now if you had “added on” uninsured motorist coverage, you would received an additional $25,000 in coverage because “added on” means your coverage limit stacks on top of their car insurance limits. 

So as you can see, that’s pretty useful! Considering most drivers elect to have state minimum liability limits, you can mitigate another driver’s low limits if you choose “added on” uninsured motorist, when shopping for car insurance. 

The Cost Difference

The cost difference to upgrade from “reduced by” to “added on” is typically pretty minimal, but it’ll depend on your insurance score, and prior claims history. 

I find that calculating the “cost” doesn’t start and end with your monthly payment. It’s really about how much it’ll cost you over the coming years. 

Think about it: does it cost more or less to save $30 per month on your payment, but have a $25,000 claim denied 2-3 years from now?

Clearly the denied claim is the most costly situation you’ll get into, and this entire article has ONLY been focused on small accidents. 

Before you make your decision on coverage, ask yourself: “Would I be okay if someone hit me and they caused $100,000 in damages?”

For most people, the answer is typically no.

Ready to start saving?

We can shop your car insurance through over 30 different insurance companies.

Quotes are completely free, and no obligation.

Tired of Rising Insurance Premiums?

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